Google Boosts Android Wireless Business and Buys Motorola in Largest Acquisition. Microsoft, Apple, Research in Motion, Nokia on High-Alert.

In an effort to boost its Android operating system, and increase market share in the highly competitive mobile phone industry, Google is buying Motorola for $12.5 billion in cash. This is Google's largest acquisition ever, and a clear indication to its competitors in the mobile space that the company is willing to utilize the significant cash at its disposal to dominate the lucrative and growing smartphone market. Apple, Research and Motion, Nokia, and Microsoft will all be on high-alert after this deal.

The deal values Motorola at $40 per share, or a whopping 63 percent premium to its closing price on Friday. Google paying such a huge take-over premium for a company may be a clear indication that current prices for other mobile manufacturers like Nokia and Research in Motion are depressed and poised to rise over the next twelve months, especially if Microsoft decides to fight fire with fire in the mobile handset wars and buy Nokia or RIM.

Google has been gaining significant market-share recently with its Android platform, but a lack of intellectual property in the wireless area was hampering its growth. Instead of innovating on its own, and devoting significant time and resources towards research and development, Google just bought a company with existing patents and previous research completed.

Earlier this month Google's competitors, including Apple, Microsoft, and Research in Motion, bought a significant patent portfolio from Nortel, effectively blocking Google from the process.

Google states that it will run Motorola as a separate business and close the deal by the end of this year, or the beginning of 2012.

More at the Vancouver Sun.

Happy Investing : )

The World's Most Valuable Brands. Apple, Google, and IBM Take the Lead.

Reuters news agency has released a list of the world's most valuable brands. The annual BrandZ study reveals that Apple (NASDAQ: AAPL) now leads its rivals Microsoft and Google by a wide margin. The iPad maker's brand is now worth an estimated $153 billion dollars, which amounts to about half of the company's market capitalization. Simply put, consumers are now far more apt to pay more for many of Apple's products due to the company's brand name recognition.

Like most successful luxury brands, Apple has been able to use higher prices to reinforce the value of the brand in the consumer's eyes. Hype and effective marketing of its products have now left consumers clamouring for every new gadget or device the company releases, which has allowed the company to reap profit margins in the range of 20 - 30 % after taxes and all other expenses have been paid. That is a healthy margin that leaves the company with lots of room for shareholders to breathe.

The Top Brands by Value:

1. Apple
2. Google

3. IBM

4. McDonald's

5. Microsoft

6. Coca-Cola

7. AT&T

8. Marlboro

9. China Mobile

10. General Electric

Clearly, technology companies dominate the ranking this year, with old stalwarts like McDonald's, Coke, Marlboro, and GE rounding out the rest. 

Why cigarette maker Marlboro? There are still many loyal cigarette consumers in North America and Europe, and though it is declining slowly here, the popularity of smoking is booming in Asia, where there is often a fascination for everything American. The same is very much the case for McDonald's, which is seeing a rise in the value of its brand as Asian consumers develop a taste for unhealthy fast-food of the North-American variety.

As a shareholder or investor, it is always important to pay close attention to the brand awareness of consumers. Brands provide a moat, or a defensive wall around your business that is often very powerful at preventing competitors from stealing away your customers.

Happy Investing and be sure to own some top brands in your portfolio's. 

BlackBerry to use Bing as Microsoft Contends with Google's Android now Leading the Smartphone Market.

Research in Motion (NASDAQ: RIMM, TSE: RIM) has announced that Microsoft's Bing search engine, the perennial loser in the struggle for search engine market share, will be the default engine on it's BlackBerry devices. This announcement was made by Microsoft (NASDAQ:MSFT) CEO Steve Ballmer at BlackBerry World, the industry conference hosted by RIM in Orlando, Florida.


Rival Google (NASDAQ: GOOG) dominates the search market and this move by Microsoft is hoping to take away some of Google's dominant market share. Google's Android phones, however, are beginning to take hold of the smartphone market as well, which has been bad for RIM and many other handset makers. Many industry watchers say that the Android phones are more user-friendly and open to third-party apps than are the phones of their rivals.


According to recent Nielson surveys, Android now has a 29% market share of smartphones in the US. Blackberry is now at 27%, while Apple's sits at 27% as well. Of course, it is important to note that Apple and Blackberry are also handset makers, while Google is not, they simply generate the operating system or OS.

Investors Should Buy What They Know and Steer Clear of What They do not Understand.

It is important for the intelligent investor to "buy what they know." Or only stick to owning businesses for which they would be able to notice opportunities, changes, or threats in their respective sectors. When competing with millions of other people around the world for the buying and selling of stocks, one must possess a reasonable expectation of spotting competitive, strategic, or systemic threats to the businesses that they own. It is, therefore, important to diversify, but only within reason.

For instance, many investors have an appetite and desire to own technology and renewable energy stocks. On the whole, the rapid and inherent nature of change in the technology sector makes threats and difficulties very difficult to notice with regards to many technology stocks on the market today. Many great technology names have come and gone over the years, and few have managed to withstand the constant pressure to innovate and re-invest themselves.

IBM (NYSE: IBM) has done so for decades, and continues to do so with much success, but many others are in constant fear of being overtaken by the next great technological fad or change. Even the great Microsoft (Nasdaq: MSFT) is beginning to come under siege by Google (NYSE: Goog), Apple (Nasdaq: AAPL) and others... especially in the cloud computing arena, which might be the next great shift in the technology space.

Other individuals might be very astute at spotting key developments in the fashion or retail space. Personally, many clothing stocks such as Aeropostale (NYSE: ARO), American Eagle (NYSE: AEO), Gap (NYSE: GPS) etc. carry a lot of uncertainty as I may be unaware of important trends taking place in the fashion space. On the other hand, trends in the energy, banking, or consumer staples arena are much easier for me to wrap my head around. A knowledge of current oil inventories and reserves for Suncor (TSE: SU), in combination with a prediction of energy prices over the next year, could give me a reasonable valuation for the company, but a variety of key factors concerning current clothing trends would leave me at a disadvantage compared to other investors in this sector of the economy. In the Art of War, Sun Tsu said to evade your enemy if unequally matched. In investing, the same is true.

Warren Buffet, the Oracle of Omaha and guru for many value investors, always said to steer clear of something that you do not understand. It is nearly impossible to tell if a company has a "durable competitive advantage," or good defence against competition, if you do not understand how its business operates, who its primary competitors are, and what threats or changes are on the horizon. Without this knowledge, the intelligent investor is exposing themselves to far too much risk. Investing should never be a guessing game, but a calculated and well played match between you and other investors to acquire businesses for a reasonable and well rationalized price.

If you cannot assign a true dollar value to the company, independent of the current stock price, than you should not own it. You would not buy a rental property without first understanding the neighbourhood it is in and how much rent it generates, so do not buy a stock without first knowing how it actually makes its money, who its customers are, and what the competition is like.

If most industries are unfamiliar to you, a quality, low-fee mutual fund or exchange traded fund are probably best.

Happy Investing : )